The new UK government has an important mission: to try to make the recession that threatens the country as painless as possible. Former Prime Minister Liz Truss failed to produce credible reports, although her resignation was prompted by the tax plan. This Thursday UK Economy Secretary Jeremy Hunt unveiled the new tax plan in what is known as the “Autumn Statement”. The roadmap, which is a 180-degree reversal from its predecessor, has not calmed the market.

The budgetary adjustment expected by the British government is about 63 billion euros. First, the measure that caused controversy was that high incomes were taxed at a rate of 45%. The new plan lowers the income threshold from €171,000 (£150,000) to €143,240 (£125,140), of which the top income tax band, 45%, will be paid, and it will be frozen rather than increased. , the share of tax-free income to include more taxpayers in the coming years.

In the previous plan, the then economy minister, Kwasi Kwarteng, proposed eliminating the 45% surcharge for those earning more than £150,000 a year, it will be removed entirely. The conservative minister will also raise a temporary windfall tax on oil and gas companies from 25% to 35% and set a provisional rate of 45% on those surpluses for electricity producers.

However, the pound took these new measures by falling against both the dollar and the euro. The British currency fell 0.98% against the dollar and set the exchange rate at $1.1791. More moderate was a 0.34% decline against the euro to cross 1.1410 euros per pound.

Despite the recorded currency drops, they have nothing to do with those that occurred when you submitted your Truss accounts. At this point, the Bank of England was forced to intervene. On Monday, the pound fell to $1.0384. For its part, the yield recorded in the secondary debt markets for 10-year British bonds rose slightly to 3.218%.

The shadow of an economic recession hangs over the UK. UK inflation rose to 11.1% in October higher than expected, pushing interest rates up and predicting a larger slowdown in economic growth. The Office of Fiscal Responsibility predicts a 2% fall in the economy and a 9% fall in house prices, although it believes inflation has already peaked. It is hoped that stronger public finances and lower inflation prospects will eventually lead to a faster economic recovery.

Silvia Dall’Angelo, senior economist at Federated Hermes Limited, notes that the country is likely to “entered a recession” Therefore, it seems “reasonable” that the Minister of Economics has emphasized short-term support. Consequently, “the reaction of the financial markets has been limited and has generally confirmed the credibility, at least for the moment, of the new government’s fiscal orthodox powers.”

Azad Zangana, an economist and senior European strategist at Schroders, agrees with the economist and explains that the announcement provided short-term support for an economy already in recession.

The expert believes that the minister has achieved “a delicate balance between short-term economic support – in the form of energy subsidies – and long-term fiscal sustainability”. For her, the problem of limited productivity growth “looms over us and is a potential source of further financial frustrations in the future.”

Ben Leidler, global market strategist at eToro, a multi-asset investment platform, says the government’s announced measures “will put pressure on already struggling consumers and exacerbate the UK recession.” Therefore, he explains that “We hope that more sustainable public finances and the outlook for lower inflation opens the door to a possible stronger economic recovery.”

Among the many announcements, Zangana said the most important were those relating to energy bills, benefits and pensions, and personal taxes. However, he believes that in general the budgets are “quite discouraging, and despite the claim that inflation is the enemy, many of the announced measures do little to reduce it.”